What was the tax benefit of using an insurance trust?
Insurance properly owned by a trust is not included in your taxable estate. That can save a fortune of estate taxes for those subject to tax. In the old days, not so long ago, when the exemption was only $600,000 that was a lot of people. Even if you were a young married person a term policy alone could have triggered tax.
So why would anyone care now?
Taxes haven’t disappeared. There could be a $1 million federal exemption in 2013. No one knows for sure. So, just like mom always said “better safe than sorry.” Also, don’t forget state tax. In New York, if your estate is over $1 million, there will be a state estate tax. Even though the rate is not nearly as high as the federal estate tax use to be, if you can avoid it with a relatively simple trust, why not.
Other than taxes, are there any other reasons to consider using an insurance trust?
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